Supply Chain Resilience: Are You Diversifying Your PCB Supply Chain?

The electronic production process is an inherently risky one—the highly complex, interconnected nature of the electronic components supply chain and the ever-increasing speed of technological advancements make it impossible to sheathe yourself from all risks and consistently meet demand. Threats are multifaceted and intermingle, ranging wildly from Acts of God to man-made accidents; geopolitical instability, cyber risks, talent gaps; and raw material and asset shortages.

A lack of supply chain visibility, transparency, and control coupled with highly complex BOMs, short product life cycles, and a highly competitive and volatile market for critical components and raw materials make delivering on time, at the right quality, and at the margin expected a challenge, to say the least. 

Rather than responding to supply threats with large inventory buffers, a risky and potentially costly move, companies would be better served by implementing more sustainable risk mitigation tactics focused on design and sourcing flexibility.

A supply chain diversification strategy with a balanced, thoughtful approach to where and how you choose to diversify may allow you to garner the benefits of both global and domestic supply and reduce geographical clustering and supplier concentration risks that can multiply risk factors.

Supply Chain Diversification; The Road to Resilience

Supply chain disruptions and stock-outs can cause severe damage to your brand and your profits. Out-of-stock or delays anywhere along the value chain, whether due to logistical bottlenecks, severe weather conditions, or capacity restraints, can trickle down and result in production delays or trigger the need for a redesign, contributing to inefficiencies and loss of revenue.

Furthermore, according to a survey conducted by IPC earlier this year, 86 percent of electronics manufacturers are worried about inflation, and nine out of ten electronic manufacturers are currently experiencing a rise in material prices.

To safeguard their margins and their reputation, companies must adopt a nuanced but pragmatic supply chain approach that aligns with organizational objectives.

At its core, risk management and resilience are about managing trade-offs, aligning procurement and supply chain decision-making with corporate aims and values such as weighing service vs. margins, and tolerance for risk. For example, do you pay for that costly air freight to expedite a needed component or take the hit on service? 

By diversifying your supply base and thereby mitigating both geographical and logistical risks while affording yourself more options, you can more skillfully manage these trade-offs, implement contingency plans and minimize risk exposure, improving your reaction times and lessening potential impacts by maintaining quality and service levels and ensuring business continuity. 

This is what is referred to as resilience—the ability to respond to disruption and maintain the flow of required resources, including tools, materials, human and intellectual, despite headwinds such as logistical bottlenecks and extreme weather conditions, and even large black swan events like a pandemic, war or the closing of an airline.

However, as Elon Musk said, “The supply chain stuff is really tricky.” And the PCB supply chain even more so."

To diversify effectively and develop a resilient supplier ecosystem, you must first get to know your end-to-end supply base and identify potential areas of vulnerability.

• Who and where are your suppliers’ suppliers? 
• How do your suppliers mitigate their supply risks? 
• What kind of relationship and influence do they have on their (and thereby your) critical suppliers?

For example, highlighting the massive impact of political instability on the PCB supply chain, in March of 2022, Ingas and Cryoin, Ukraine’s two leading suppliers of neon—an essential raw material in PCB production—who make 45% to 54% of the world’s semiconductor-grade neon reported halting operations as Moscow sharpened its attack on the country, further aggravating the semiconductor shortage and escalating prices.

In this scenario, by understanding where your supplier or potential supplier is sourcing its neon from and finding alternative supply from non-Ukraine-based sources such as Taiwan, you can strategically diversify and mitigate your risks. But of course, there are significant challenges to garnering the level of supply chain transparency needed. Not the least of which is suppliers’ general unwillingness to divulge sensitive information and undermine competitive advantage.

In fact, a CIPS & Deloitte report found that only 13% of firms have a fully mapped supply chain network, and 71% of firms have limited or no visibility beyond Tier 2.

The Challenges of Diversifying the PCB Supply Chain

The complexity of electronic products, whether bare board or components, makes supply chain management and strategic diversification a harrowing task. Due to the custom-designed nature of PCAs and PCBs, there are no direct replacements. Additionally, the failure of a board may mean an entire PCBA will need to be replaced. 

Although there are many suppliers to choose from, diversifying the supplier base is further impeded by the wide range of supplier capabilities and performance, making supplier qualification and selection a cumbersome process requiring attention to detail.

Supply chain flexibility is often considered during the design phase. As semiconductors don’t always have comparable or direct replacements, one solution is to under-design boards to allow multiple parts within a product family to be used in the PCBA. This critical mitigation tactic allows for greater flexibility during supply shortages, increasing the likelihood of sourcing a replacement.

The creation of PCBs and PCAs requires a wide variety of manufacturing processes, such as high-speed drilling and routing and precise photoimaging, and component placement, requiring specialized tooling and raw materials that do not have direct replacements. If product requirements change, PCBs and PCAs cannot be easily returned, reworked, or recycled, leading to unneeded inventory and adding costs.

These are just a few examples of the headwinds procurement faces in sourcing fast-moving electronics. Suppliers each have their own competitive advantage, strategic capabilities, and strengths. Understanding these details will help you determine if the supplier fits your sourcing strategy and if they’ll make for a good long-term partner that can help you mitigate supply risks and safeguard your profits.

Octopart - Helping You to Pivot

Supply chain risk management and resilience are now a business imperative. However, not all risks can be mitigated, especially given the complexities of the PCB supply chain and the current geopolitical and market environment—this is why we’ve gone the extra mile to provide you with the data and resources you need to pivot quickly in times of scarcity. 

The electronics industry is likely to continue to experience supply chain disruptions, by locating parts and gaining an idea of historical availability in order to project future availability is critical. We may not be able to fix the entirety of the supply chain, but we can at least help you get what you need when it’s hard to find! (Take a look at our integrated circuits page to find the components you need.)

Octopart’s electronics search engine can help you stay nimble and quickly pivot in times of scarcity, ensuring you keep your projects moving by providing you access to up-to-date distributor pricing data, parts inventory, and parts specifications, and it’s all freely accessible in a user-friendly interface. 

Lifecycle Status

Octopart users have long since asked us to provide more supply chain information, such as manufacturer lifecycle data. So we listened, and in March 2020, we added lifecycle status for over 650,000 parts on Octopart.com and have continued to grow this steadily since. 

Lead Time

Along with lifecycle status, lead time can help you ensure the parts you’re using in your design will be around when you need them.

Avoid the expenses and delays that come with replacing a component that won’t be available in time by accessing lead time on Octopart.com early in your design process.

Updated Specs View

An updated Specs View on our Search Results Page makes filtering by key attributes and comparing specs across different parts easier, allowing you to quickly find that critical replacement or alternative when shortages hit.

BOM Tool Updates

You need to be able to quickly see if parts may be difficult to procure. To that end, we’ve made information such as lead time and lifecycle status to the Octopart.com BOM tool making it more seamless and providing a better user experience. This way, you can easily upload and scan the BOM and identify potential issues. To make things even easier, we’ve also added an “availability indicator” showing general procurability for each BOM line.

Stock Notifications

Be notified within an hour if your selected distributors’ stock reaches your desired quantity. 

To start using stock notifications, sign up for a free Octopart account here, and find complete instructions on how to use this feature here.

Inventory History

Inventory History not only helps you determine whether the parts in your design will be available when you need them but help you to understand the larger trends at play and whether the part you’re considering is particularly subject to market volatility. 

Powered by Nexar Spectra, Inventory History is able to display up to one year of part-level data, with the option to toggle between a 3-month or 12-month window. Historical data includes stock for franchised distributors only, and every effort has been made to exclude duplicate or anomalous data. 

Nexar Spectra

Through Spectra, the new family of data products from Nexar, we’ll be able to deliver even more insights to help you navigate the current industry landscape. For example, you can now sign up for a free account to access the Electronic Design to Delivery Index (EDDI), a monthly report containing category- and subcategory-level insights into industry supply and demand over the past year. The EDDI can help you make smarter business decisions: purchase strategically, identify risk across your designs or component lists, and better identify where and when to seek out alternate parts.